Alan Johnson, the Home Secretary, is to keep tight restrictions on migrant
workers from Romania and Bulgaria just a day after admitted the Government
had been inept in handling immigration.

The annual limits on low-skilled workers from the two Eastern European nations will be maintained for another two years but could then be lifted if the economy has improved.

The Home Office announcement came as a think tank warned an amnesty for illegal immigrants would cost the taxpayer more than £130 billion pounds over the following years of such a move.

Restrictions were put in place on workers from Romania and Bulgaria when they joined the EU in 2007, following criticism over the Government's decision not to impose limits after the previous expansion of the Union in 2004.

That decision has led to hundreds of thousands of workers arrive in the UK from Poland, Lithuania and their former Eastern Bloc neighbours.

On Monday, Mr Johnson said the Government had been "maladroit" over it's handling of immigration and that it had increased pressure on local jobs and services.

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Phil Woolas, the immigration minister, yesterday said the limits will remain until 2011 because "given the current labour market situation, it is important that we continue to give weight to the need to protect the interests of the resident workforce".

However, he added that any further extensions at that point would be based on "serious labour market disturbance" and a "further evidence-based review".

The decision means the annual quota of just under 25,000 low-skilled workers from the two countries remains in place.

Migrationwatch, the think-tank, has warned any amnesty of illegal immigrants could mean up to one million people being allowed to stay which would cost the country some £134 billion in public funds during the course of their lifetimes.

The paper follows comes after a report ordered by Boris Johnson, the Mayor of London, said an amnesty for illegal immigrants would boost the British economy by £3 billion a year and raise tax revenues by £842 million.

Mr Woolas, said: "The policy on an amnesty for illegal immigrants remains unchanged and is very clear – there will be no amnesty. An amnesty would be self-defeating as it would create a significant pull factor to the UK and would undermine the immigration system as a whole."